Fleet management comes with a lot of paperwork, for compliance with laws and regulations. Despite the hassle, tracking certain numbers can prove to be beneficial for your fleet business, in terms of cost reduction. Your fleet vehicles’ mileage is, without a doubt, one of those numbers. For this reason, keeping a consistent fleet vehicle mileage log is important; in order to claim tax deductions for your business.
What is a fleet vehicle mileage log?
The IRS must know your fleet business’s operating expenses; and this includes mileage, as well. To that end, you need to be meticulous in keeping records of it. So, to answer the question, a fleet vehicle mileage log represents the total miles driven with every fleet vehicle; and, of course, for every trip.
This process may seem tedious, especially if done the old-fashioned way; that is to say, by hand — on paper or spreadsheets. Telematics technology comes into play to offer smart and time-efficient tools, to get this chore done in no time.
To be specific, a vehicle management platform can automatically upload and store your fleet vehicle mileage logs in a centralized database. From then on, you’ll have all the information you need to know about your fleet’s mileage, at your fingertips.
Why do you need a mileage log?
It’s surprising — in the age of digital transformation — to still see fleet businesses estimate their mileage using outdated means. Yet, it happens because it works well enough for them; no matter how time-consuming it may be.
However, this leaves these companies susceptible to the risk of deduction losses, in case they’re audited by the IRS. Why is that? Put plainly, the IRS demands detailed fleet vehicle mileage log records; doing this work by hand, equals possible errors and omissions.
Luckily, IoT and vehicle management software can make all the difference in your efforts to keep mileage records in shipshape. Once the software collects the data from the OBD II devices installed in each vehicle, you’ll have all data regarding mileage and fuel usage available.
This way, you get a clear picture of the tax deductions you can claim for your fleet business; which, in turn, will help reduce — even eliminate — unnecessary costs that might have been burdening your company.
Fleet vehicle mileage log requirements for the IRS
Mileage deduction is intended to cover the operating costs of fleet companies. When it comes to tax reimbursements, the first thing to remember is to keep mileage logs for each fleet vehicle. Also, it’s vital that you do so for each trip. According to the IRS, you must keep these records for at least three years.
Second, you need to determine a method of calculation that fits your business best. Generally speaking, you can use one of the two following methods to figure your fleet business’s deductible expenses:
- The standard mileage deduction. This method is simple, since it only requires that you maintain a fleet vehicle mileage log. Keep in mind, if you employ five or more fleet vehicles simultaneously, you’re not eligible to use this method.
- The actual vehicle expenses. This method requires that you retain detailed records related to your fleet and its operation; such as maintenance, repairs, insurance, vehicle depreciation, as well as receipts and other documentation that pertain to driving costs.
You can read more on which method you should use, and if you qualify to switch between them, here, and here.
Another thing to consider is the rate per mile (or standard mileage rate) for the current tax year. Last December, the IRS has announced that the standard mileage rate for 2021 will be 56 cents; in other words, 1.5 cents lower than last year’s rate.
Furthermore, in case you use a fleet vehicle for both business and personal purposes, you must keep different mileage records; one for each purpose. A vehicle management platform can help.
What information must your mileage records provide to the IRS?
In brief, your fleet vehicle mileage records must provide the following information for every vehicle and each trip:
- Purpose of trip (personal or business)
- Date of trip
- Starting location
- Starting mileage on the odometer
- Ending mileage on the odometer
- Total mileage for the trip
- Tolls and other trip-related expenses
Keep tabs on your fleet vehicle mileage log with Veturilo
Keeping records of all the data the IRS requires for each vehicle and trip is not easy; especially for a fleet business. Thankfully, due to the digital transformation of services, companies have managed to replace time-consuming manual processes with cutting-edge software. Nowadays, fleet vehicle mileage log reporting for every tax year is a matter of a few clicks.
Using vehicle management software, like Veturilo, you can automatically track mileage for all fleet vehicles and trips. That’s, simply by making use of the trip log feature (or mileage report). Let’s see how you can start keeping records of your fleet vehicle mileage log with Veturilo:
- First, register with the Veturilo Fleet Management service, get a subscription, receive and install your OBD II device in each of your fleet vehicles.
- Once you’ve set off with your trip schedule, Veturilo will automatically start logging your trips; along with trip-related events. You only need to indicate if a trip is a business trip or not.
- Finally, you can export each fleet vehicle’s mileage report and forward it to your accountant for deductible expenses.
When you have Veturilo keeping tabs on your fleet vehicle mileage logs, nothing can go amiss with your fleet expenses!